Vanguard International Semiconductor Corp (世界先進), which makes driver ICs used in TV panels and power management chips, posted a 25 percent quarterly decline in net profit for last quarter, as some clients reduced orders due to longer-than-expected inventory digestion.
Net profit dipped to NT$1.39 billion (US$44.98 million) in the quarter ending on March 31, compared with NT$1.93 billion in the previous quarter. On an annual basis, net profit swelled 20 percent from NT$1.15 billion.
Earnings per share dropped from NT$1.16 the previous quarter to NT$0.84, but were up from NT$0.7 a year earlier.
Gross margin last quarter dropped to 36.1 percent, compared with 38 percent in the fourth quarter of last year, due to lower factory utilization, but improved from 32.2 percent in the same quarter a year earlier.
Vanguard said that it expects business momentum to weaken further this quarter, leading to a quarterly revenue reduction of 2 to 7 percent.
Revenue this quarter is forecast to be between NT$6.4 billion and NT$6.8 billion, compared with last quarter’s NT$6.91 billion, it said.
“Due to slower-than-expected supply chain inventory digestion and uncertainty about end-product demand, our clients are conservative about wafer demand,” Vanguard chairman Fang Leuh (方略) told investors on Tuesday. “Our order visibility is about two months through to the end of the second quarter.”
However, demand for power management ICs is expected to remain robust this quarter, Fang added.
Power management ICs last quarter contributed 53 percent of the company’s overall revenue, up from 51 percent in the previous quarter.
The share is to increase this quarter, Fang said.
Chips related to 5G infrastructure deployment, such as power management ICs used in base stations, are showing extraordinary momentum, Vanguard vice president of sales Thomas Chang (張東隆) said.
“The deployment of 5G networks in all regions around the world is accelerating faster than clients’ expectations,” Chang said.
Vanguard is also benefiting from integrated device manufacturers’ (IDMs) outsourcing of power management IC production to cope with strong demand, Chang said.
Revenue contribution from IDMs is to exceed 30 percent this year, the chipmaker said.
Vanguard said that it plans to spend NT$11.7 billion on new equipment this year, with most to be allocated toward the acquisition of an 8-inch fab in Singapore from GlobalFoundries Inc.
The acquisition would boost 8-inch wafer capacity by 5 percent, or 40,000 wafers per year, after the transaction is completed on Dec. 31, Vanguard said.
This year, capacity is to be little changed at about 2.5 million 8-inch wafers per year, it said.
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